Royalty Adjustment Risk Assessment

Services

Political Risk Analysis

Challenge

Peru’s mining industry was concerned that Ollanta Humala was to become president, because as a candidate he had pursued with vigor the topic of resource nationalism. Even though investors were protected by state laws, they knew that Humala could alter the national royalty scheme undeterred.

Approach

The affiliate for Americas Market Intelligence (AMI) worked with several miners to help them gather information on the government’s intentions as well as communicate to the government the swiftly negative investment decisions that would be taken if the royalty program was altered.

Eventually, the new president backed down and decided to uphold the legal protection of investors, thereby exercising only a minor change to the royalty scheme.

Result

AMI’s affiliate provided the client with valuable “opposition research” at the commencement of their negotiations with the government.

Furthermore, AMI’s affiliate helped to facilitate an accord between the mining industry and the Peruvian industry.

Client Benefit

AMI’s affiliate team in Peru worked alongside the mining community to analyze the intentions of the newly elected central government when it comes to setting a royalty level and collecting it.

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